Should We File Bankruptcy Together?
You know that sinking feeling when you’re staring at a pile of bills you simply can’t pay? If you’re married and living in Massachusetts, you’re probably wondering whether you and your spouse should tackle bankruptcy as a team or separately.
There is no universal solution. But don’t worry. We’re going to walk through everything you need to know about joint bankruptcy filing in Massachusetts, so you can make the best decision for your family’s future.
Why Most Massachusetts Couples Choose to File Together
Joint bankruptcy filing in Massachusetts offers several practical advantages. When you file bankruptcy jointly, you pay the same filing fee as an individual: $338 for Chapter 7 bankruptcy and $313 for Chapter 13. This represents immediate savings compared to separate filings, which would require two separate filing fees.
The real advantage extends beyond cost savings. Joint filing often makes sense when you and your spouse share most of your debts. If both names appear on the mortgage, credit cards, and car loans, filing together provides the most complete fresh start.
Massachusetts law allows married couples to double many exemptions when they file jointly. These exemptions protect the property you can keep during bankruptcy, including your car, household items, and work tools. Greater protection provides more financial security during the process.
Your Home is Safe with Strong Massachusetts Protection
Massachusetts provides some of the strongest homestead protection in the country for bankruptcy filers.
As of August 2024, if you have filed a Declaration of Homestead with your local Registry of Deeds, you can protect up to $1 million in home equity during bankruptcy. Even without that declaration, you receive $125,000 in automatic protection.
For couples where both spouses are 62 or older, or if either spouse is disabled, each spouse gets their own $1 million homestead exemption, potentially protecting up to $2 million in home equity.
Important note: Unlike other exemptions, you cannot double the homestead exemption simply because you are married and filing jointly. However, with up to $1 million in protection per eligible spouse, additional protection may not be necessary.
When Filing Separately Makes More Sense
Individual filing may be the better choice in these situations:
- Pre-marital debt. If only one spouse accumulated significant debt before marriage, separate filing may be more appropriate. Generally, debt acquired before marriage remains individual responsibility, though exceptions exist.
- Separate finances. If you maintain completely separate bank accounts, credit cards, and assets, individual filing might provide more targeted relief.
- Divorce proceedings. This creates complex considerations, but sometimes completing bankruptcy before finalizing divorce is preferable.
- Income disparities. When one spouse has much higher income or valuable assets, this can affect Chapter 7 qualification or Chapter 13 payment amounts.
What Happens When Only One Spouse Files
If your spouse files for bankruptcy but you do not, you maintain some protection. For joint debts when your spouse files Chapter 13, the “codebtor stay” temporarily prevents creditors from pursuing you for shared debts while the bankruptcy case remains active.
However, once your spouse receives discharge, creditors can typically pursue you for remaining balances on joint debts. This provides temporary protection but is not a permanent solution.
Chapter 7 vs. Chapter 13 Bankruptcy Differences for Couples
Your choice between these bankruptcy types affects how joint filing works:
Chapter 7 (Liquidation)
This faster process typically concludes within four months and eliminates most unsecured debts like credit cards and medical bills. Both spouses must pass the “means test” based on household income. This option works best when you have limited assets to protect and credit card debt is your primary concern.
Chapter 13 (Reorganization)
This involves a 3-5 year payment plan based on combined household income. It often works better if you are behind on mortgage payments and want to keep your house, or if you have assets requiring protection that would not be covered by Chapter 7 exemptions.
What Property Can You Keep
Beyond your house, Massachusetts law protects substantial property when you file bankruptcy. Under Massachusetts General Law Chapter 235, Section 34, married couples filing jointly can often double these exemptions:
- Motor vehicles (both, up to certain limits)
- Household goods and clothing
- Work tools
- Bank account funds
- Retirement accounts including 401(k)s and IRAs
- Life insurance policies
Exemption amounts change periodically, so verify current limits when preparing to file.
The Step-by-Step Process
Joint bankruptcy filing follows this general process:
- Initial consultation. Meet with a bankruptcy attorney to review your situation and determine whether joint filing makes sense and which chapter suits your needs.
- Documentation. Gather financial documents for both spouses including pay stubs, tax returns, bank statements, and debt information. Both spouses must sign all bankruptcy forms.
- Filing. Your attorney submits your petition to the U.S. Bankruptcy Court for the District of Massachusetts. The automatic stay takes effect immediately, stopping most creditor collection actions.
- 341 Meeting. Approximately one month after filing, both spouses attend the “meeting of creditors.” You will answer questions from the bankruptcy trustee about your finances.
- Discharge. If proceedings go smoothly, you receive your discharge order eliminating qualifying debts. The timeline depends on which chapter you filed.
Common Mistakes That Can Cost You
These errors frequently affect Massachusetts couples:
- Asset transfers. Moving money or property between spouses immediately before filing can appear as hiding assets from creditors.
- Missing homestead declaration. Failing to file this document means losing nearly $900,000 in potential protection.
- Pre-filing debt accumulation. Recent charges, especially for luxury items, might not be dischargeable.
- Preferential payments. Paying back family members while ignoring other creditors may result in trustee recovery of these payments.
- Unrealistic debt expectations. Student loans, recent taxes, child support, and certain other debts typically survive bankruptcy.
What About Divorce
If you are considering divorce, timing matters. Generally, completing bankruptcy before finalizing divorce is preferable because bankruptcy can eliminate debts that might otherwise be divided in divorce court. However, every situation differs, and this area requires professional guidance.
Key Points to Remember
- Joint filing often saves money and provides better exemption protection
- Massachusetts homestead protection is generous, up to $1 million per eligible spouse
- The choice between Chapter 7 and Chapter 13 affects how joint filing works
- Some situations require separate filings instead
- Timing matters, especially if divorce is being considered
- Professional guidance is essential given the complexity and stakes involved
Your Questions Answered
Can we file together if we are separated?
Yes, as long as you remain legally married. However, separation can complicate how property and debts are handled.
What if my spouse refuses to file with me?
You cannot force your spouse to join your bankruptcy case. You can file individually, though this might limit how effectively you can address joint debts.
Will this hurt both our credit scores?
Bankruptcy appears on both spouses’ credit reports. However, the long-term impact is often less damaging than continuing to struggle with unmanageable debt.
Can we switch from individual to joint filing later?
Generally, no. This decision must be made at the beginning. Changing typically requires dismissing your case and starting over.
What if we have very different incomes?
Joint filing combines both incomes for qualification and payment calculations. Sometimes this helps couples qualify for Chapter 7 or results in lower Chapter 13 payments.
Do we both have to attend court?
Yes, both spouses must attend the 341 meeting and any other required hearings.
Getting Professional Help
Making the wrong choice about joint versus separate bankruptcy filing can be costly. You might lose property you could have protected, delay your financial recovery, or even have your case dismissed.
Making the wrong choice about joint versus separate bankruptcy filing can be costly. You might lose property you could have protected, delay your financial recovery, or even have your case dismissed.
The good news? You don’t have to figure this out alone. At the Law Office of Eric Kornblum, we help Massachusetts couples sort through these decisions every day. We’ll look at your complete financial picture, explain your options in plain English, and help you choose the path that gives your family the best possible outcome.
Stop letting financial stress eat away at your marriage and your peace of mind. Schedule a conversation with our Massachusetts bankruptcy attorneys today to start a conversation about your options and begin your journey toward financial freedom. We offer free consultations to help you get the guidance you need. Your fresh start is waiting and it might be closer than you think.
MA bankruptcy lawyer Eric Kornblum graduated from State University of New York, Binghamton in 1989 and received his law degree in 1992 at Western New England College, School of Law. Since opening his own practice, Eric has been dedicated to helping his clients resolve their financial problems both in and out of court.
